fDi’s European Cities and Regions of the Future 2018/19 – Cities

London has retained its top spot, celebrating more than a decade as fDi’s European City of the Future, with Dublin climbing to second and knocking Paris into third position. Cathy Mullan details the winning cities.

While picking up other accolades along the way, London has won top billing as overall European City of the Future for 2018/19. In the five years to September 2017, London welcomed 1880 foreign investments, the highest of all 301 cities included in the ranking.

In the time period studied, London attracted more projects than Paris and Dublin combined, including investments from companies such as US-based retailing giant Amazon, US-based internet behemoth Facebook and Israel-based co-working solutions company Mindspace. The city’s investment landscape was dominated by the service sectors. Nearly half of all investments made were in software and IT services, followed by almost one-fifth in business services and more than 12% in financial services.

In September 2017, Belgium-based security solutions provider Praesidiad, moved its corporate headquarters from Belgium to London. The company partly credited its decision to move to the “access to a wealth of talent hubs” it would have in the city. London is home to more than 350,000 students, and over 57% of the population aged between 25 and 64 is educated to tertiary degree level – the highest level of all cities studied. London boasts seven of the world’s top 500 universities and three of the city’s business schools feature in the Global MBA Rankings for 2016 – factors that also contributed to its first place ranking in the Human Capital and Lifestyle category.

The UK’s capital city also topped the ranking for Business Friendliness following the UK’s high performance in various indices, including the World Bank’s Ease of Doing Business ranking and the Heritage Foundation’s Index of Economic Freedom. London is home to nine of the Top 1000 World Banks of 2017 according to The Banker's Top 1000 World Banks ranking, and scored the highest of all cities in the Innovation Cities Index.

Irish eyes smiling

Second placed Dublin’s FDI success story continues, as the Irish capital rises above Paris in fDi’s ranking of European cities. With eyes on the unfolding Brexit negotiations across the Irish Sea, Dublin is seeking to benefit from companies that might consider leaving London to find a new financial services hub to call home.

Dublin received the same number of projects in the financial services sector in the first three quarters of 2017 as it received in the whole of 2016 and 2015 combined. In August 2017, Canada-based TD Securities (a subsidiary of Toronto-Dominion Bank) announced it was to expand its operations in Dublin with the opening of a post-Brexit EU hub, while in July 2017, Bank of America subsidiary Merrill Lynch said it would establish new EU headquarters in Dublin.

Dublin, which at 12.5% offers one of the lowest rates of corporation tax in Europe, fares well against its main financial services competitors, Amsterdam (ranked fourth overall) and Frankfurt (seventh). In 2015, Dublin attracted the lowest number of projects in the financial services sector out of the three cities. However, by the end of third quarter 2017 it had surpassed both its rivals. All three cities saw an upswing in financial services investment in the first nine months of 2017 compared with the 12 months of 2016.

Dublin received the highest level of capital investment in R&D of all the cities studied, welcoming more than $1.6bn in R&D investments in the five years to September 2017. Late in 2015, the Irish government published its Innovation 2020 – Excellence Talent Impact report, which laid out its policy plans for attracting R&D investment and supporting full employment.

As part of the plan, the government aims to increase the number of research personnel in the country by 60% to 40,000 people; to develop the network of research centres in the country; and to reach an R&D intensity target of 2.5% of gross national product. Russia-based software company Kaspersky Lab’s vote of confidence in Dublin came with the opening of a research lab in September 2016. The company said the city was becoming known as the Silicon Valley of Europe and credited opportunities to hire quality tech talent and collaboration with other IT companies as the main drivers behind its decision.

Oui to Paris

Paris, France’s most populous city as well as its capital, has ranked third of all European cities and attracted the second highest number of FDI projects of all locations examined. A total of 728 investments were made into the city during the five years to September 2017. More than 43% of these were sales, marketing and support functions; over one-quarter in business services; and more than 15% in headquarters operations.

US-based software company Intuit acknowledged the city’s talented workforce as a reason for opening a new development centre in Paris – its first move in continental Europe. Thirty-seven higher education institutions in Paris educate 650,000 students and more than half of the population aged between 25 and 64 is educated to degree level. Paris is also home to 10 of the world’s top 500 universities, more than any other European city, which also helped it to rank third of all major European cities for Human Capital and Lifestyle.

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